CAPACITY ALLOCATION AND CONGESTION MANAGEMENT

Guideline on Capacity Allocation and Congestion Management (CACM Regulation) lays down the binding guidelines for the implementation and operation of EU-wide single market coupling in the day ahead and intraday timeframe. CACM Regulation entered into force on 14 August 2015. You can find the CACM Regulation here.

The CACM Regulation has been developed pursuant to the network code development process in accordance with Article 6 of Regulation (EC) 714/2009. This means that it was developed in strong coordination among ENTSO-E, the Agency and stakeholders. It was later changed into a Commission guideline and adopted on the basis of Article 18 of Regulation (EC) 714/2009. You can find more about the historical development of the CACM Regulation here.

The CACM Regulation defines binding requirements for Transmission System Operators (TSOs), Nominated Electricity Market Operators (NEMOs), Regulatory Authorities and the Agency for implementation and functioning of integrated electricity market in the day-ahead and intraday timeframe. The core elements of CACM Regulation are:

Optimal definition of bidding zones. Bidding zones are geographic areas within which physical electricity exchanges are unrestricted, whereas exchanges between bidding zones require cross-zonal capacities which are limited in order to avoid congestions within the electricity network. Bidding zones should be defined in a way that prevents structural and other major physical congestions in the network caused by electricity exchanges. CACM Regulation requires from TSOs and Agency to regularly analyse the efficiency of existing bidding zone configuration. In case the existing bidding zone configuration is determined as inefficient, TSOs need to perform a bidding zone review which essentially compares the existing bidding zone configuration with possible alternatives against a set of criteria, which aims to maximise the overall market efficiency. The bidding zone review should end with the proposal from TSOs to maintain or amend the bidding zone configuration, which is subject to approval by the regulatory authorities of the concerned Member States.

Calculation of capacities between bidding zones. TSOs have the obligation to calculate regularly the cross-zonal capacities available for exchanges between bidding zones. This process is performed within capacity calculation regions and uses the technical parameters of the network (such as a common grid model) as an input. Capacity calculation should be efficient, transparent, and strongly coordinated among TSOs. Flow-based capacity calculation should be applied on all bidding zone borders, which are electrically interdependent with other bidding zone borders (in the sense that electricity exchange on one border causes significant physical flows on other borders). Coordinated Net Transfer Capacity (CNTC) calculation may be used on biding zone borders where physical flows are not dependent on exchanges on other borders.

Allocation of cross-zonal capacities with market coupling. Cross-zonal capacities calculated by TSOs define the maximum possible electricity exchanges between bidding zones. These are determined by an optimisation algorithm called market coupling that collects all bids and offers from different bidding zones and clears the market by optimising the economic surplus arising from exchanges between bidding zones. In the day-ahead timeframe, market coupling is organised as an EU-wide implicit auction, which defines the accepted bids and offers, the prices and the amount of imports or exports for each bidding zone in EU. In the intraday timeframe, market coupling is organised as continuous trading that continuously matches the bids and offers provided by market participants respecting the available cross-zonal capacities. Market coupling in both timeframes is performed by NEMOs. CACM Regulation generally allows for competition between NEMOs in providing services to market participants.

Management of residual congestions with remedial actions. Those physical congestions which were not successfully prevented with capacity calculation and allocation need to be managed by TSOs using the remedial actions such as countertrading or redispatching. CACM Regulation requires from TSOs to coordinate their countertrading or redispatching actions and to share the costs arising from these actions.

The CACM Regulation provides also many other requirements which essentially support the main activities mentioned above.